Monday, November 7, 2011

Two more German Motorola-Apple trials scheduled for November 18 and December 2

The leading German news agency, dpa (Deutsche Presse-Agentur), reports that the Mannheim Regional Court has scheduled trials of two other Motorola Mobility lawsuits against Apple for November 18 and December 2, 2011.

It's a safe assumption that all these lawsuits relate to the same patents and products as the Motorola Mobility Inc. v. Apple Inc. case in which the court entered a default judgment on Friday. In August, Motorola said that it sued Apple in Germany in April. This means that the first one of these cases went from complaint (April) to a decisive trial (October) in only about six months -- even the fastest "rocket docket" in the United States can't match that speed. By comparison, the US International Trade Commission (ITC) is popular because of its relatively swift proceedings, and those take about three times as long to get to a final ruling. Even the relatively slowest one of those three Motorola v. Apple cases will go to trial within eight months of the filing of the complaint.

The court said that those other lawsuits target other Apple entities but didn't specify which ones. But I'm quite sure that one of the other cases targets two German Apple entities -- Apple GmbH and Apple Retail Germany GmbH -- and the other one relates to Apple Sales International of Cork, Ireland. Why am I confident that I know? Samsung and Motorola presumably use the same law firm in Mannheim, Quinn Emanuel. That world-class firm represents both companies in the United States against Apple; it represents Motorola in Mannheim as the Friday ruling showed; and Samsung is suing the four Apple entities I mentioned in three different lawsuits (but apparently all over the same patents and products) in Mannheim. It's very unusual to have separate lawsuits against different entities over the same patents and products. Actually, the usual way in Germany is to sue all legal entities of a corporate group in the same proceedings, but sometimes the courts sever cases by patents if the patents are substantively unrelated to each other.

Earlier today I talked to a Germany-based patent litigator working for a large international law firm. He told me that both Motorola's tactic of filing parallel lawsuits over the same patents and products and a default judgment against a player like Apple are puzzling.

The court told dpa that Apple's lawyers did not show up for the hearing. Maybe Apple gave the court a call so the judge wouldn't wait for them, or sent someone other than their outside counsel to tell the participants in the hearing about it, but that's something the court wouldn't say.

Mannheim is the #2 German court for patent infringement litigation (Düsseldorf is #1). There isn't much first-instance patent litigation in this country outside those two courts. Companies and their lawyers usually steer clear of alienating the judges.

The default judgment against Apple Inc. isn't irrelevant as long as there's a risk of enforcement. It does restrict Apple in certain ways, and even though it may be hard for Motorola to prove that shipments into the German market occur at Cupertino's direction, Apple will have to tread very carefully.

Motorola's three lawsuits apparently target all elements of Apple's supply chain: from the U.S. over Ireland to Germany.

Many tech companies use Ireland as the hub of their European business, taking advantage of low corporate tax rates while operating right within the EU's Single Market (no customs barriers etc.). Entities in other European countries than Ireland are typically operated on a "cost-plus" basis to minimize the amount of profits taxable at higher rates. The Irish entity, Apple Sales International, is domiciled at Hollyhill Indsutrial Estate in Hollyhill, Cork, Republic of Ireland. It has a German Value Added Tax Identification Number for the business it does in Germany. Apple's General Terms and Conditions for German customers state the Irish entity as the supplier and as the contractual partner of local customers.

Therefore, the lawsuit against the Irish entity will be of particular importance from a logistical point of view.

The role of the German entities is unclear. One of them may be an importer, or they may both just be sales and marketing organizations that have the role of a service provider within the worldwide Apple group.

An injunction against the German entity would certainly hit Apple's local sales and marketing hard. As a result, even the mere possession of iPhones and iPads by Apple's German employees (except if they own them privately) could become illegal. But if Apple just gave its employees phones from other vendors -- Android phones might work -- and stopped promoting its products in Germany, it wouldn't violate the injunction and customers could still buy from the Irish entity. While Apple Inc. is the ultimate parent company that faces potential liability, it's unlikely that Apple's German entities have any responsibility for the Irish entity.

It's hard to imagine that the court will issue different substantive rulings on the very same patents and products in those three parallel cases in Mannheim. But Motorola opted (as did Samsung) to pursue parallel litigation, and the court didn't consolidate those cases. That's why there are different hearing dates.

On November 18, there could again be a risk of a no-show by Apple's counsel, but since the November 18 and December 2 hearing dates relatively close to each other, I guess it was just the October 21 trial that didn't fit into Apple's plans.

If I go to any of the Mannheim hearings, I'll be sure to live-tweet. I always followed and appreciated live tweet coverage from Webwereld's Andreas Udo de Haes (Dutch and German Apple-Samsung hearings) and itnews.com.au's James Hutchinson (Australian Apple-Samsung hearings).

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About Me

Florian Mueller is an app developer who used to be an award-winning intellectual property activist. His 30 years of software industry expertise span different market segments (games, education, productivity and infrastructure software), diverse business models, and technical and commercial areas of responsibility. In recent years, Florian advised a diversity of clients on the patent wars surrounding mobile devices, and on their economic and technical implications. (In order to avoid conflicts of interest, Florian does not hold or initiate transactions in any technology stocks or derivatives thereof, except that he is long AAPL.) He is now developing games for smartphones and tablet computers.